United lease savings in Denver approved

Washington DC
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A Denver city council committee has approved an amended lease between United Airlines and Denver International Airport that lowers the airline's monthly payments and adds gates to the contract.

The amendment will save the Chicago-based airline about $22 million a year by removing 20,439 square meters (220,000 square feet) of unused baggage sorting and maintenance space underneath concourse B from its lease with the airport, according to the airport. It will also add three gates, not the five that was previously understood, on the concourse to the airline's lease.

United's contract with the Denver airport expires in February 2025.

The airport authority will pay off about $100 million in debt associated with the unused baggage space. However, United will be responsible for that amount if they fail to maintain at least 22.78 billion available seat miles in a calendar year after the amendment goes into effect, which is scheduled to occur on 1 July.

The agreement could prompt United to add capacity in Denver after shrinking at the airport during the past few years. It decreased passenger capacity at the airport by 10% during the year ending in December 2011, according to the airport.

United is the largest airline at the Denver airport. It carried 23.9% of passenger traffic during the year ending in January, according to the US Department of Transportation.

Denver airport will also lower costs for other airlines. It will use $1.50 of the $4.50 passenger facility charge (PFC) it collects on enplaning passengers to defray other airlines costs. These savings are expected to equal about $1 million annually for Southwest Airlines and $2 million annually for Frontier Airlines, which are the airports second and third largest carriers.

The PFC funds were previously used to service the debt associated with the unused baggage space.